Question 1

The opportunity cost of watching television is:

Accepted Answer

A)  all of the alternative programs that appear on other stations. 
B)  zero because there is no money expenditure involved. 
C)  the alternative use of the time foregone by watching the program. 
D)  zero if it benefits you. 
A)  all of the alternative programs that appear on other stations. 
B)  zero because there is no money expenditure involved. 
C)  the alternative use of the time foregone by watching the program. 
D)  zero if it benefits you.

Question 2

Given a production possibilities curve,a point:

Accepted Answer

A)  inside the curve represents unemployment. 
B)  on the curve represents full employment. 
C)  outside the curve is currently unattainable. 
D)  all of the above. 
A)  inside the curve represents unemployment. 
B)  on the curve represents full employment. 
C)  outside the curve is currently unattainable. 
D)  all of the above.

Question 3

Just before class,Jim tells Stuart,"Stuart,you shouldn't skip class today because you have paid tuition to enroll in the class." Stuart ignores Jim's advice,and instead makes the decision of whether to attend based on the importance to his grade that he feels he'd be missing that day in class relative to his value of the extra time he could have to finish the video game he is playing.To an economist,Stuart is:

Accepted Answer

A)  using marginal analysis. 
B)  ignoring the total value of attending class. 
C)  ignoring the concept of opportunity cost. 
D)  irresponsible. 
A)  using marginal analysis. 
B)  ignoring the total value of attending class. 
C)  ignoring the concept of opportunity cost. 
D)  irresponsible.

Question 4

The principle that the opportunity cost increases as the production of one output expands along the production possibilities curve is the:

Accepted Answer

A)  law of increasing opportunity costs. 
B)  law of demand. 
C)  law of supply. 
D)  law of diminishing returns. 
A)  law of increasing opportunity costs. 
B)  law of demand. 
C)  law of supply. 
D)  law of diminishing returns.

Question 5

When the production possibilities curve is bowed out,resources are:

Accepted Answer

A)  equally well-suited to production of both goods. 
B)  not being used efficiently. 
C)  not equally suited to the production of both types of goods. 
D)  increasing as more of one good is produced. 
E)  of an inferior quality. 
A)  equally well-suited to production of both goods. 
B)  not being used efficiently. 
C)  not equally suited to the production of both types of goods. 
D)  increasing as more of one good is produced. 
E)  of an inferior quality.

Question 6

On the production possibilities curve,a movement between points that yields a loss of one good in order to raise the output of another good will maintain efficient production.

Accepted Answer

A) True 
 B)False

Question 7

The production possibilities curve shows that:

Accepted Answer

A)  some of one good must be given up to get more of another good in an economy that is operating efficiently. 
B)  no output combination is impossible. 
C)  an economy that is operating efficiently can have more of one good without giving up some of another good. 
D)  scarcity can be eliminated. 
A)  some of one good must be given up to get more of another good in an economy that is operating efficiently. 
B)  no output combination is impossible. 
C)  an economy that is operating efficiently can have more of one good without giving up some of another good. 
D)  scarcity can be eliminated.

Question 8

Which of the following will be most likely to cause the production possibilities curve for a country to shift inward?

Accepted Answer

A)  an increase in the labor force 
B)  an increase in unemployment 
C)  development of an improved technological method of production 
D)  a decrease in the stock of physical capital 
A)  an increase in the labor force 
B)  an increase in unemployment 
C)  development of an improved technological method of production 
D)  a decrease in the stock of physical capital

Question 9

Every economic choice has an opportunity cost.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true about the production possibilities curve when a technological progress occurs? The curve:

Accepted Answer

A)  shifts inwards to the left. 
B)  becomes flatter at one end and steeper at the other end. 
C)  becomes steeper. 
D)  shifts outward to the right. 
E)  does not change. 
A)  shifts inwards to the left. 
B)  becomes flatter at one end and steeper at the other end. 
C)  becomes steeper. 
D)  shifts outward to the right. 
E)  does not change.

Question 11

If an economy is operating at a point inside the production possibilities curve,

Accepted Answer

A)  its resources are not being used efficiently. 
B)  the curve will begin to shift inward. 
C)  the curve will begin to shift outward. 
D)  This is a trick question because an economy cannot produce at a point inside the curve. 
A)  its resources are not being used efficiently. 
B)  the curve will begin to shift inward. 
C)  the curve will begin to shift outward. 
D)  This is a trick question because an economy cannot produce at a point inside the curve.

Question 12

The production possibilities curve shows different combinations of goods that:

Accepted Answer

A)  can be consumed by households. 
B)  can be consumed by firms. 
C)  can be produced with the available technology. 
D)  are produced and consumed by firms. 
E)  are bought and sold in the market. 
A)  can be consumed by households. 
B)  can be consumed by firms. 
C)  can be produced with the available technology. 
D)  are produced and consumed by firms. 
E)  are bought and sold in the market.

Question 13

Exhibit 2-10 Production possibilities curve data
  
-Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10.The first unit of capital goods will cost the economy ____ units of consumption goods.

Accepted Answer

A)  25 
B)  2 
C)  1 
D)  23 
E)  11 
A)  25 
B)  2 
C)  1 
D)  23 
E)  11

Question 14

Any point on the production possibilities curve illustrates:

Accepted Answer

A)  minimum production combinations. 
B)  maximum production combinations. 
C)  economic growth. 
D)  a nonfeasible production combination. 
A)  minimum production combinations. 
B)  maximum production combinations. 
C)  economic growth. 
D)  a nonfeasible production combination.

Question 15

People in poor countries may have difficulties achieving economic growth because:

Accepted Answer

A)  their production possibilities curves slope upward instead of downward. 
B)  they must cut back on current consumption to increase capital goods. 
C)  they have a solid consumption base already in place. 
D)  their resource bases are fully developed. 
E)  the law of increasing costs makes it hard to produce more goods. 
A)  their production possibilities curves slope upward instead of downward. 
B)  they must cut back on current consumption to increase capital goods. 
C)  they have a solid consumption base already in place. 
D)  their resource bases are fully developed. 
E)  the law of increasing costs makes it hard to produce more goods.

Question 16

The process of accumulating capital is called:

Accepted Answer

A)  capitalization. 
B)  loanable funds. 
C)  investment. 
D)  debt management. 
A)  capitalization. 
B)  loanable funds. 
C)  investment. 
D)  debt management.

Question 17

If more of one good can be produced without producing less of another output,the economy must have been operating efficiently.

Accepted Answer

A) True 
 B)False

Question 18

Exhibit 2-11 Production possibilities curves
  
-In Exhibit 2-11,which of the following could have caused the production possibilities curve to shift from the one labeled B to the one labeled A?

Accepted Answer

A)  A major natural disaster. 
B)  An increase in resources. 
C)  An advance in technology. 
D)  A decrease in unemployment. 
E)  An improvement in literacy. 
A)  A major natural disaster. 
B)  An increase in resources. 
C)  An advance in technology. 
D)  A decrease in unemployment. 
E)  An improvement in literacy.

Question 19

Investment in capital accumulation,as well as investment in education and other labor productivity enhancing programs,are necessary for economic growth.

Accepted Answer

A) True 
 B)False

Question 20

An analysis of production possibilities curves indicates that the reason why underdeveloped nations have difficulties increasing their economic growth rates is because:

Accepted Answer

A)  low population growth rates mean fewer workers to produce food and other necessities. 
B)  their production possibilities curves shift in when resources are increased. 
C)  their production possibilities curves are positively sloped, unlike those in more developed economies. 
D)  they must cut back their already meager consumption levels to increase capital production. 
E)  the opportunity cost of shifting resources from consumption goods to capital goods is relatively low. 
A)  low population growth rates mean fewer workers to produce food and other necessities. 
B)  their production possibilities curves shift in when resources are increased. 
C)  their production possibilities curves are positively sloped, unlike those in more developed economies. 
D)  they must cut back their already meager consumption levels to increase capital production. 
E)  the opportunity cost of shifting resources from consumption goods to capital goods is relatively low.

Exam 2: Production Possibilities,Opportunity Cost,and Economic Growth

The opportunity cost of watching television is:

Given a production possibilities curve,a point:

The principle that the opportunity cost increases as the production of one output expands along the production possibilities curve is the:

When the production possibilities curve is bowed out,resources are:

On the production possibilities curve,a movement between points that yields a loss of one good in order to raise the output of another good will maintain efficient production.

The production possibilities curve shows that:

Which of the following will be most likely to cause the production possibilities curve for a country to shift inward?

Every economic choice has an opportunity cost.

Which of the following is true about the production possibilities curve when a technological progress occurs? The curve:

If an economy is operating at a point inside the production possibilities curve,

The production possibilities curve shows different combinations of goods that:

Exhibit 2-10 Production possibilities curve data -Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10.The first unit of capital goods will cost the economy ____ units of consumption goods.

Any point on the production possibilities curve illustrates:

People in poor countries may have difficulties achieving economic growth because:

The process of accumulating capital is called:

If more of one good can be produced without producing less of another output,the economy must have been operating efficiently.

Exhibit 2-11 Production possibilities curves -In Exhibit 2-11,which of the following could have caused the production possibilities curve to shift from the one labeled B to the one labeled A?

Investment in capital accumulation,as well as investment in education and other labor productivity enhancing programs,are necessary for economic growth.

An analysis of production possibilities curves indicates that the reason why underdeveloped nations have difficulties increasing their economic growth rates is because:

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters